Every SC taxpayer gets at least $100 rebate in Senate bill
Everybody who files an income tax return in South Carolina — even the more than 1 million people who pay no state income tax — would get a rebate check of at least $100 in a bill being considered by the state Senate.
A subcommittee sent the rebates to the full Senate Finance Committee on Thursday. They make up about half of a $2 billion package that would also cut the top income tax rate from 7% to 5.7%.
The Senate proposal doubles the money put into tax cuts by the House, which unanimously passed its own tax package without a rebate last week.
Tax cuts went from talk to action in the past few weeks after state economists announced that between the booming state economy and money saved from previous budget years, South Carolina lawmakers have an extra $4.5 billion to spend this session.
The money has come from all areas, with taxes on sales, corporations and income all increasing sharply.
Because the extra money isn't just income tax revenue, it's important to make sure the 44% of filers who don't make enough to pay state income tax — about 1.1 million total — get something back because they do pay sales tax, subcommittee chairman Sen. Tom Davis said..
"I would like to see them see something out of this," the Republican from Beaufort said.
For taxpayers who do pay income tax, the rebate would essentially give them back what they paid for a year with a cap at $700. About 39% of taxpayers pay more than $700. About 18% would get back about exactly what they pay.
"This is a sense of rough justice here," Davis said.
Davis said the bill needs to get to the Senate floor as fast as possible so the House and Senate can begin negotiating the differences in their plans in time for representatives to make sure they pull the right amount of money from the $14 billion budget.
The House plan cuts the top tax rate from 7% to 6.5% next year and keeps cutting to 6% over five years. It also collapses all other tax brackets to the lowest group at 3%.
Some Republicans have been pushing for tax cuts for more than a decade. The extra revenue not only got more Republicans on board, but also Democrats. No one voted against the House bill. Twenty-nine of the Senate's 45 members are sponsoring their tax cut proposal, including five Democrats.
Sen. Kevin Johnson is a Democrat from Manning who supports the bill, but also wants lawmakers to be careful that the other $2.5 billion in extra money gets spent on long-term needs such as education, roads, maintenance on state buildings and help for poorer areas of the state.
"That's a billion dollars that could go to some things that we've said in the past are good needs requests," Johnson said of the rebate offer. "We are flush with money now, but there are plenty of unknowns."
And some Republicans, while they are certain votes for the tax cut, wish it did more. Sen. Sean Bennett said calling the Senate bill the " Comprehensive Tax Cut Act of 2022 " is not quite accurate because the state's "tax policy is intricate and has tentacles everywhere."
The Summerville Republican would prefer that the state take a long look at changing income tax, sales tax and property tax policy, getting rid of exemptions and making the system fairer as part of any income tax cut package.
"We're not doing comprehensive tax reform. I get it, "Bennett said. "You know why? Because it is hard."